Prime Minister Tony Abbott has used the rejection of taxpayer support for fruit processor SPC Ardmona to set an important "marker" for how his government will deal with requests for industry assistance.
The 93-year-old Victorian company wanted a $25 million federal grant, topped up by $25 million from the Victorian government and its own $150 million investment, for new product development and technology to prop up its operation.
But after three hours of debate in federal cabinet on Thursday, Mr Abbott said the plan was rejected because it was not the government's job to restructure a particular business.
The decision, which workers and growers fear will lead to the operation's closure, comes weeks after Holden's bid for support was rejected and its parent company General Motors announced the end of car production in Australia in 2017.
"The decision that came from the cabinet today does set an important marker," Mr Abbott said.
"This is a government which will make sure that the restructuring that some Australian businesses need, that some Australian sectors need, is led by business, as it should be."
The government's role was to create the right climate for business, he said.
Mr Abbott said SPC Ardmona - owned by food giant Coca-Cola Amatil - was a strong business with the resources to allow it to restructure.
The company advised the government it was prepared to invest an extra $161 million into the business and renegotiate its enterprise bargaining agreement.
Mr Abbott said the company's present EBA had conditions "well in excess of the award", including a wet allowance and generous redundancy provisions.
However SPC Ardmona managing director Peter Kelly said the company would review its business plans.
"This is an unexpected and extremely disappointing decision by the coalition, particularly after the enormous support we have received for our business plans from the local community and beyond," Mr Kelly said.
Acting Opposition Leader Tanya Plibersek said the government had failed in its fundamental role - to protect jobs and bring on new investment.
"First they forced General Motors Holden out - now they are sending SPC Ardmona to the wall," Ms Plibersek said.
Labor pledged at the 2013 federal election to provide the $25 million grant.
If the plant closes, it is estimated 1500 direct and 2700 indirect jobs could be lost in the Shepparton region.
Shepparton mayor Jenny Houlihan said workers faced an unknown future.
"The $25 million that the government refused to let go today will be eaten up in unemployment benefits," she said.
Australian Manufacturing Workers' Union national secretary Paul Bastian said workers had been improving productivity, but other factors were affecting the business, such as the dumping of cheap imports and the high dollar.
"The government directly and indirectly subsidises mining, agriculture, finance, fisheries and other important Australian industries and yet it is continually cutting investment in manufacturing," Mr Bastian said.
"Soon, when we go to the supermarket ... there will be nothing left made in Australia."
Victorian Opposition Leader Daniel Andrews said if state premier Denis Napthine could not convince Mr Abbott to stump up $25 million for SPC Ardmona, he struggled to see how Dr Napthine could secure $300 million for Toyota as it considers its future.